Case 4.2 Licensing and Laissez Faire

Case 4.2 Licensing and Laissez Faire Milton Friedman, a Nobel Prize winning economist believes that the licensing in all fields interferes with Laissez Faire, the principle of the free market. The case titled “Licensing and Laissez Faire” focuses on the issues of licensing within the American Medical Association (AMA). The AMA was formed to raise physicians’ incomes by paying hospitals to limit the number of physicians they train. It is well known that their strategy worked, American physicians make far more than physicians in other countries. Friedman argues that limiting the numbers of students in the admission policy violates a moral rule and is restricting freedom of opportunity; however, letting incompetent physicians practice does not seem ethical. Lastly, as the result of limiting the number of physicians there may be a shortage of physicians within a decade.
Friedman strongly believed in “Laissez Faire,” and that licensure contravenes the principles of a free market to the disadvantage of all. “’Laissez Faire’ means ‘leave alone’ or ‘to allow to do’ in French and in economic terms, economics and business function best when there is no interference by the government. It is one of the guiding principles of capitalism and a free market economy. This concept assumes that each individual’s self-interest to do better, strong competition from others, and lowering taxes will lead to the strongest economy and therefore, benefit business, and everyone will benefit as a result (Hill).” However, with any licenses, Friedman sees it as interference from government or any authorities that permit the occupational or professional group to enjoy Monopoly. He also criticizes occupational licensure in all fields because it would restrict entry into the field.
The American Medical Association (AMA) seems to be the strongest trade union in the U. S. in…...

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